Biotech Values

[DewDiligence]

Hammer thinks AAVL has 50% chance of success in phase-2 AMD trial (according to his definition of success):

http://www.orf-blog.com/avalanche-biotech-approaching-the-moment-of-truth/

I view Avalanche as an attractive stock with a favorable risk/reward ratio based on the preliminary efficacy data, the external validation for retinal gene therapy and VEGF as a proven target. I assign a 50% likelihood of a positive outcome in the Phase II (i.e. a significant reduction in anti-VEGF rescue treatments and a 6-letter improvement in visual acuity). Although this means I believe the trial has an equal likelihood of failing, I expect the stock to have a ~200% move (~$2.5B market cap) with good news vs. -80% in case of a failure.

Using Hammer’s definition of success—and adding the requirement that there are no troubling safety issues—my probability of success is less than 50%. (No position.)